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October 9, 2017

“I am seeing a ton of coverage of our recent issues driven by stereotypes of our employees and attacks against fantasy, strawman tech cos” wrote Facebook Chief Security Officer Alex Stamos on Saturday in a reeling tweetstorm. He claims journalists misunderstand the complexity of attacking fake news, deride Facebook for thinking algorithms are neutral when the company knows they aren’t, and encourages reporters to talk to engineers who actually deal with these problems and their consequences.

Nobody of substance at the big companies thinks of algorithms as neutral. Nobody is not aware of the risks.

— Alex Stamos (@alexstamos) October 7, 2017

Yet this argument minimizes many of Facebook’s troubles. The issue isn’t that Facebook doesn’t know algorithms can be biased or that people don’t know these are tough problems, but that the company didn’t anticipate abuses of the platform and work harder to build algorithms or human moderation processes that could block fake news and fraudulent ad buys before they impacted the 2016 U.S. presidential election, instead of now. And his tweetstorm completely glosses over the fact that Facebook will fire employees that talk to the press without authorization.

[Update: 3:30pm PT) I commend Stamos for speaking so candidly to the public about an issue where more transparency is appreciated. But simultaneously, Facebook holds the information and context he says journalists and by extension the public lack, and the company is free to bring in reporters for the necessary briefings. I’d certainly attend a “Whiteboard” session like Facebook has often held for reporters in the past on topics like News Feed sorting or privacy controls.]

Stamos’ comments hold weight because he’s leading Facebook’s investigation into Russian election tampering. He was the Chief Information Security Officer as Yahoo before taking the CSO role at Facebook in mid-2015.

The sprawling response to recent backlash comes right as Facebook starts making the changes it should have implemented before the election. Today, Axios reports that Facebook just emailed advertisers to inform them that ads targeted by “politics, religion, ethnicity or social issues” will have to be manually approved before they’re sold and distributed.

And yesterday, Facebook updated an October 2nd blog post about disclosing Russian-bought election interference ads to congress to note that “Of the more than 3,000 ads that we have shared with Congress, 5% appeared on Instagram. About $6,700 was spent on these ads”, implicating Facebook’s photo-sharing acquisition in the scandal for the first time.

Stamos’ tweetstorm was set off by Lawfare associate editor and Washington Post contributor Quinta Jurecic, who commented that Facebook’s shift towards human editors implies that saying “the algorithm is bad now, we’re going to have people do this” actually “just entrenches The Algorithm as a mythic entity beyond understanding rather than something that was designed poorly and irresponsibly and which could have been designed better.”

Here’s my tweet-by-tweet interpretation of Stamos’ perspective:

I appreciate Quinta’s work (especially on Rational Security) but this thread demonstrates a real gap between academics/journalists and SV. t.co/CWulZrFaso

— Alex Stamos (@alexstamos) October 7, 2017

He starts by saying journalists and academics don’t get what it’s like to actually like to implement solutions to hard problems, yet clearly no one has the right answers yet.

I am seeing a ton of coverage of our recent issues driven by stereotypes of our employees and attacks against fantasy, strawman tech cos.

— Alex Stamos (@alexstamos) October 7, 2017

Facebook’s team has supposedly been pigeonholed as naive of real-life consequences or too technical to see the human impact of its platform, but the outcomes speak for themselves about the team’s inadequacy to proactively protect against election abuse.

Nobody of substance at the big companies thinks of algorithms as neutral. Nobody is not aware of the risks.

— Alex Stamos (@alexstamos) October 7, 2017

Facebook gets that people code their biases into algorithms, and works to stop that. But censorship that results from overzealous algorithms hasn’t been the real problem. Algorithmic negligence of worst-case scenarios for malicious usage of Facebook products is.

In fact, an understanding of the risks of machine learning (ML) drives small-c conservatism in solving some issues.

— Alex Stamos (@alexstamos) October 7, 2017

Understanding of the risks of algorithms is what’s kept Facebook from over-aggressively implementing them in ways that could have led to censorship, which is responsible but doesn’t solve the urgent problem of abuse at hand.

For example, lots of journalists have celebrated academics who have made wild claims of how easy it is to spot fake news and propaganda.

— Alex Stamos (@alexstamos) October 7, 2017

Now Facebook’s CSO is calling journalists’ demands for better algorithms fake news, because these algorithms are hard to build without becoming a dragnet that attacks innocent content too.

Without considering the downside of training ML systems to classify something as fake based upon ideologically biased training data.

— Alex Stamos (@alexstamos) October 7, 2017

What is totally false might be somewhat easy to spot, but the polarizing, exaggerated, opinionated content many see as “fake” is tough to train AI to spot because of the nuance with which it’s separated from legitimate news, which is a valid point.

A bunch of the public research really comes down to the feedback loop of “we believe this viewpoint is being pushed by bots” -> ML

— Alex Stamos (@alexstamos) October 7, 2017

Stamos says it’s not as simple as fighting bots with algorithms because…

So if you don’t worry about becoming the Ministry of Truth with ML systems trained on your personal biases, then it’s easy!

— Alex Stamos (@alexstamos) October 7, 2017

…Facebook would end up becoming the truth police. That might lead to criticism from conservatives if their content is targeted for removal, which is why Facebook outsourced fact-checking to third-party organizations and reportedly delayed News Feed changes to address clickbait before the election.

As most of the world focuses on the US presidential election tonight, GoPro just announced a recall of its first-ever drone, the $799 Karma. Approximately 2,500 Karma units sold since October 23rd (meaning all of them) are impacted. GoPro says “in a very small number of cases, Karma units lost power during operation.” Thus far, there have been no reports of injuries or property damage because of the defect. kerui alarm

Recalled Karma drones can be returned to GoPro directly or wherever they were purchased originally for a full refund. For now, the company won’t be offering any exchanges for a fixed model; you’ll have to wait until shipments resume “as soon as the issue is resolved.”

GoPro executives addressed production issues surrounding the Karma during last week’s earnings call, but didn’t mention any plans for a recall or the power issue at Zgemma star H.2S the time. “We are working in close coordination with both the US Consumer Product Safety Commission and Federal Aviation Administration,” said CEO Nick Woodman in a statement from tonight’s press release. “We are very sorry to have inconvenienced our customers and we are taking every step to make the return and refund process as easy as possible.” sunray 800 hd se

The recall is a significant setback for GoPro as it attempts to challenge leader DJI in the drone business, and it follows a bruising financial quarter for the action cam maker.

The private transit service “Leap” drew praise from many quarters of San Francisco for its tech-­friendly buses’ reclaimed wood trappings, and ire for its lack of wheelchair access.

In May, California regulators issued a cease-and-desist order to the company for running without permits. The company immediately said in an announcement it would be “offline” for the week. But the service never returned, and now it seems the company has filed for bankruptcy.

In bankruptcy court filings dated July 15, Leap Transit filed under Chapter 7 of the United States Bankruptcy Code.

The now­-defunct company’s assets and liabilities were both estimated to be between $100,000 and $500,000, according to bankruptcy filings signed by Leap founder Kyle Kirchoff.

Receipts were filed with Leap’s affiliates, including SV Angel, the investment firm of the politically connected San Francisco tech investor Ron Conway.

The bankruptcy only came to light as the website “West Auctions: Commercial Auctions and Asset Services,” advertised two buses in Leap transit colors for sale, replete with Leap’s logo.

The heading for the listing is “Bankruptcy Auction of Leap Transit, Inc with (2) NABI 27 passenger CNG Luxury Buses.”

Starting bids for these buses is $5.

Leap’s buses were built to compete with Muni’s 30­-Stockton line, shuttling Marina District workers to the Financial District during commute hours. Now those buses are housed in Alameda, awaiting auction.

Bidding starts Tuesday, Oct. 6 and ends Thursday, Oct. 8, 2015, according to West Auctions. Online, the first bus has a note reading “Unit turns over but does not start, running condition unknown.” The second bus has a note reading, “Unit runs and idles, however throttle is not responsive.”

Phil Libin co-founded the company and grew it into a global business with more than 150 million users.

Bloomberg News

Phil Libin, the co-founder of digital note-taking service Evernote Inc., is moving into venture capital two months after he stepped down as chief executive of the startup.

General Catalyst Partners has named Mr. Libin its fourth general partner in Silicon Valley, he said in an interview. The firm also has two GPs in New York and three in Boston, where the firm was founded 15 years ago.

Mr. Libin co-founded Evernote and became its CEO in 2007. The startup achieved a $1 billion valuation in 2012 and amassed more than 150 million users, but it has since run into fierce competition from companies such as Google Inc. and Microsoft Corp.

Evernote replaced Mr. Libin as CEO in July with Google X executive Chris O’Neill after the company sought an executive with more corporate experience.

“The puzzles I want to work on are the early-stage puzzles,” said Mr. Libin, explaining why he felt it was time to leave Evernote. “How do you find product market fit? How do you design something beautiful? How do you get a team of talented nerds to walk through walls” to build a product?

His old company, where he remains executive chairman, is focused on making its business more predictable, getting better at operations, and hiring the people necessary to be a public company, he said.

Mr. Libin said he had spoken with a few venture-capital firms and hadn’t planned on going back to work so soon, but he decided the fit was right with General Catalyst. He starts work next Monday and will help the firm deploy its $675 million seventh fund.

Mr. Libin’s past overlaps with General Catalyst: He grew up in New York, before founding companies first in Boston and then in California.

“Phil has the right empathy for entrepreneurs,” said Hemant Taneja, the firm’s general partner. “He’s been through the grind [founding other companies], and has a great product mind for applications.”

Establishing relationships with entrepreneurs is increasingly important for venture firms hoping to find the next Facebook Inc. A few years ago, before capital was flooding into Silicon Valley, most startups would eventually have to turn to the top VC firms for their Series A and Series B rounds of funding, Mr. Libin said. Today, startups have more options.

Mr. Libin isn’t new to investing. He has invested his own money in several companies including digital-ad platform TellApart Inc., which this year was acquired by Twitter Inc. for more than $500 million, and payroll service ZenPayroll Inc., backed by General Catalyst.

He is the latest tech CEO to join a venture-capital firm, following moves this year by Jim Payne of MoPub Inc. who joined Accel Partners, and Alex Rampell of TrialPay Inc. who signed on with Andreessen Horowitz.

Mr. Libin said Evernote is still a year or two away from an initial public offering and will likely need to raise more capital. The company has been transitioning from a popular consumer app to a paid subscription service used by professionals to improve productivity and organization.

Wagner’s company last year began shifting away from pricey products from Oracle and International Business Machines Corp., replacing them with open-source software, which is freely available and can be modified. Now, Wagner said the closely held company is converting virtually all of its operations to free database software.

“They scale and operate extremely well and they don’t cost anything,” Wagner said.

Other companies share Wagner’s view and are shifting to software whose code is public. While the threat to Oracle has been around for years, it’s becoming more intense with recent improvements that make open-source technology more reliable — and appealing to a new generation of multibillion-dollar startups, said Terilyn Palanca, an analyst at Gartner Inc.

“There was pessimism for a decade on whether those things could stand up. The question is largely resolved,” she said. “This open source, this open core model, is something we’re going to see growing and growing through the years.”

Sales Decline

The impact shows up in Oracle’s sales of new software licenses, which have declined for seven straight quarters compared with the period a year earlier. New licenses made up 25 percent of total revenue in fiscal 2014, down from 28 percent a year earlier — a sign the company is becoming increasingly dependent on revenue from supporting and maintaining products at existing customers and having a harder time finding new business. Oracle reports fiscal fourth-quarter earnings next week.

To blunt this, the Redwood City, California-based company is expanding efforts in cloud computing, which will let it sell packaged high-margin services to customers. That may help balance the slowdown in the basic business. It also operates an open-source database called MySQL.

“Does the cloud-related business grow quickly enough to offset any long-term weakness in new software licenses? To us the answer is yes,” said Bill Kreher, an analyst at Edward Jones & Co., who has a buy rating on Oracle. “I would expect to see Oracle continue to gain market share within the cloud.”

Deborah Hellinger, a spokeswoman for Oracle, declined to comment.

Companies contemplating a move away from traditional database sellers such as Oracle have essentially two options: hire internal engineers to corral various free open-source databases, or pay the startups behind the free technologies for some must-have features. Licensing Oracle’s database can cost hundreds of thousands of dollars, depending on which of its numerous features customers choose to use.

Free Programs

One of the open-source technologies is the Cassandra database, which was created last decade and has been widely used by companies such as Apple Inc. and Netflix Inc. Though some companies develop and run Cassandra themselves, others go to the main backer, the startup DataStax Inc., for technical features they may not have the expertise to develop themselves.

DataStax, for example, has a customer that paid about $500,000 in Oracle software licenses and now spends $90,000 with DataStax for a similar project, said Matt Pfeil, DataStax’s co-founder. That price difference has started to have a major effect in the industry.

“I think I’ve been in this industry too long to use Oracle,” says Kellan Elliott-McCrea, chief technology officer of Etsy Inc. “I saw so many of my peers in the late ’90s crashing and burning and spending all of their money on Oracle.” Instead, Etsy, an online marketplace for hand-crafted goods, runs on a hodge-podge of open-source databases, primarily MySQL.

‘Sweet Spot’

Not all applications are well-suited to open source, as the systems made by Oracle and others still have capabilities far in excess of the free systems, Palanca said.

“You’re still going to have a class of applications for which these open-source solutions are not yet ready, and that is the continued sweet spot for Oracle,” she said.

Even some really big customers are finding ways to increase their reliance on upstarts. Open source is changing the type of technologies Goldman Sachs Group Inc. deploys in systems relating to messaging and databases, said Don Duet, the co-head of technology at Goldman Sachs. Many of these technologies became “standard parts” of Goldman’s computing infrastructure in the last two years, he said.

“It’s hard not to go into our datacenter and see a tremendous amount of open source running our applications and middleware,” he said. Goldman Sachs recently invested in a funding round for MongoDB Inc., another open source database provider.

Startups’ Shift

A Bloomberg survey of 20 startups valued at more than $1 billion supports the trend. The survey, which included companies such as Cloudflare Inc. and Pinterest Inc., found they placed open-source technologies at the heart of their businesses, with the exception of DocuSign, which had built around Microsoft’s SQL Server.

None of the companies surveyed indicated they had a large Oracle database deployment for their main services, though many used bits of Oracle software to run aspects of their organizations. Uber Technologies Inc., the car service, has committed heavily to Oracle via a worldwide rollout of the company’s E-Business Suite software, but job listings and presentations by Uber employees indicate it relies on a customized version of the free MySQL for its software.

“A lot of the startups now go with MySQL or less expensive options,” said David Wolff, the CEO of Database Specialists, a database consultancy. “The only thing that people complain about with Oracle is how much it costs.”

Extra Features

Companies can pay Oracle to get extra features of MySQL for $2,000 to $10,000 per computer it runs on, but none of the companies indicated this was the case. Others including Alibaba Group Holding Ltd., Facebook Inc., and Google Inc. have even built on MySQL to create their own free variant called WebScaleSQL.

Still, Oracle has its fans. Zach Nelson, the CEO of NetSuite Inc., a cloud enterprise resource planning company, described Oracle’s software as “the best transaction database,” and said it made sense to use it.

“It only costs us 6 percent of revenue, and that’s nothing,” Nelson said.

As open-source databases continue to improve, there may be less reason to pay for Oracle’s products.

When Trae Vassallo’s children hop in the car to head to their after-school sports practice in the San Francisco Bay Area several times a week, it is not Ms. Vassallo, a full-time working mother of three, who drives them. Nor is it her husband, a nanny or any other caregiver.

Instead, Ms. Vassallo, a venture capitalist with her own firm, has scheduled regular rides for her children using Shuddle, a start-up that lets parents book trips around town for their offspring. In Silicon Valley parlance, Shuddle is the Uber for kids.

SPECIAL SECTION: TRANSPORTATION

A look at how technology is changing how we get around

“It’s obviously leveraging the infrastructure that companies like Uber have figured out how to do well,” Ms. Vassallo, a former partner at the venture capital firm Kleiner Perkins Caufield & Byers who has invested in Shuddle, said of the start-up.

Shuddle is just one of a growing number of services to piggyback on the groundwork laid by Uber, the popular ride-hailing service that lets users request cars with a few taps of their smartphone. Apart from an Uber-like service for the under-16 set, there is now also a service for Bay Area commuters (Chariot), a service for Manhattan (Via) and even a service for vans (Leap Transit).

But unlike Uber, Lyft and Sidecar, which are disrupting the transportation market with all-purpose ride-booking services, these new companies focus on specific markets.

The new companies are being fueled by venture capitalists, who are pouring money into these mini-Ubers and mini-Lyfts. In March, Shuddle raised $9.6 million and has amassed a total of more than $12 million. Via, a car-pooling app serving only Manhattan, garnered $27 million in venture capital in April. Chariot, a car-pooling app aimed at commuters, has been operating in the Bay Area for less than a year and has raised $3 million for early expansion.

In total, American transport-related start-ups like Uber and others have raised $7.1 billion in financing since 2010, according to CB Insights, an investment research firm.

“Look at the economics of all of this,” Ms. Vassallo said, pointing to Shuddle and the ubiquitous need for child care and general transport services for children. “It really makes sense not only in the Bay Area but everywhere.”

Yet many of the start-ups face tough odds of success: Uber and Lyft have big head starts in many markets. Uber operates in more than 300 cities worldwide, while Lyft is in about 60 markets in the United States. Trips on those services can go for as little as a few dollars, depending on distance and time. The competition led Hailo, a British ride-booking service similar to Uber, to withdraw from the United States recently.

Photo

Chariot, a service for commuters, dropped off a man in the city’s financial district.Credit Peter Earl McCollough for The New York Times

The founders of some smaller, niche start-ups said their companies could work even though they concentrate on a subset of the market because they could develop loyal, repeat customers in a handful of cities and expand across the country over time.

They added that they could learn from where Uber failed, altering their business models and best practices to win new users. Uber, for instance, faced criticism for its driver vetting process after several rape and assault allegations against some drivers.

Shuddle said it conducted a rigorous background check and an in-person interview and required two employer references before hiring drivers. It also monitors employee insurance and license records. Shuddle is primarily a child-care service that costs $9 a month for membership and mileage-based fares per ride. The company said that more than 95 percent of its drivers were women because it tended to attract female applicants. “For women drivers on other services, there’s a perception that it might be unsafe,” said Nick Allen, founder and chief executive of Shuddle. “Our average driver is a 50-year-old mom.”

To make their services work as businesses, Leap Transit and Loup, a shuttle-based ride service, have targeted services like Uber and the greater public transit industry, focusing on relatively low fixed prices and standardized routes along commuter lines. That way, commuters may pay slightly more than they would for a public transit ride, yet avoid the potentially higher cost of taking an Uber or Lyft.

Leap Transit, the van-pooling start-up backed by the venture capital firm Andreessen Horowitz, has luxury shuttles catering to fixed routes and is offering rides for $2 for a limited time to gain traction.

Via, a car-pool service that is restricted to most of Manhattan, will drive users anywhere between 110th Street and 14th Street for a fee of $5 to $7, depending on how passengers pay. The service also works with commuter benefits programs offered by some employers, which lets users buy ride credits with pretax income.

Chariot, a ride service app for commuters in the San Francisco Bay Area, runs 14-passenger vans equipped with Wi-Fi along fixed, high-traffic commuter routes. Trips cost $3 to $5, depending on the number of prepaid rides purchased, which is slightly more than the $2.25 cost to ride the local MUNI bus and rail transportation.

“I asked people, ‘Why aren’t you taking an Uber?’ ” said Ali Vahabzadeh, chief executive of Chariot. “They would pull out their phone and Uber would be at a two or three times surge price,” he said, referring to Uber’s practice of increasing fares during times of high demand. “Instead of taking a $2 bus ride, it was comparable to a $20 Uber ride.”

Uber declined to comment.

The start-ups are still working out kinks. Leap Transit recently suspended its service in San Francisco after the California Public Utilities Commission sent the company a cease-and-desist order for operating in the state without a license. The company said on its Facebook page that it would remain offline until it worked through the regulatory issues.

Other ride-hailing companies like Uber and Lyft have faced similar regulatory hurdles and are slowly changing regulators’ opinions. Uber has won approval from officials in Colorado, California, Oregon and New York, among dozens of the other cities where it does business. But historically, Uber and its ilk have often operated with or without lawmakers’ blessings.

Uber and Lyft are not taking the proliferation of new competitors lying down and are adding new services. Each company now offers a car-pool service, Uber Pool and Lyft Line, that picks up and drops off multiple passengers in one trip, cutting the cost of a trip to a fraction of what it would have been for one rider.

In March, Lyft’s chief executive, Logan Green, said Lyft Line rides accounted for a majority of rides taken in San Francisco, and the company was experimenting with “hot spots,” high-trafficked areas for pickup, similar to some of the commuter start-up methods.

Others say that ride-booking is not a winner-take-all market and the various types of ride services that are popping up are only the beginning.

“Travelers are becoming more multimodal, having different needs for different trips and corresponding mobility choices,” said Susan Shaheen, co-director of the Transportation Sustainability Research Center at the University of California, Berkeley and an adjunct professor at the university. “There is no silver bullet to solving urban passenger transportation issues.”